Toyota cuts full-year earnings forecasts

Toyota Motor Corp. Executive Vice President Satoshi Ozawa reacts during a press conference releasing new earnings forecasts in Tokyo Friday, Dec. 9, 2011. Toyota has sharply downgraded its earnings forecast for this fiscal year through March, blaming a strong yen and the recent flooding in Thailand

/ AP

Toyota Motor Corp. Executive Vice President Satoshi Ozawa reacts during a press conference releasing new earnings forecasts in Tokyo Friday, Dec. 9, 2011. Toyota has sharply downgraded its earnings forecast for this fiscal year through March, blaming a strong yen and the recent flooding in Thailand. Japan's biggest automaker expects to book a net profit of 180 billion yen ($2.3 billion), down from 390 billion yen it projected in August. (AP Photo/Koji Sasahara)

Toyota Motor Corp. Executive Vice President Satoshi Ozawa reacts during a press conference releasing new earnings forecasts in Tokyo Friday, Dec. 9, 2011. Toyota has sharply downgraded its earnings forecast for this fiscal year through March, blaming a strong yen and the recent flooding in Thailand. Japan's biggest automaker expects to book a net profit of 180 billion yen ($2.3 billion), down from 390 billion yen it projected in August. (AP Photo/Koji Sasahara) (/ AP)

The Associated Press

Toyota Motor Corp. on Friday sharply downgraded its earnings forecast for this fiscal year through March, blaming a strong yen and the recent flooding in Thailand.

Toyota expects to sell 7.38 million vehicles worldwide this year instead of 7.6 million it predicted four months ago.

The automaker held off from releasing new earnings forecasts when it announced its first-half earnings results last month, citing uncertainties from the Thai floods that disrupted parts supplies.

It's been a rough year for Japanese car makers, who were first hit with the earthquake and tsunami in March. They had largely rebounded from the disaster when they confronted the immense flooding in Thailand this autumn. Car production as far away as North America was scaled back as the creeping floodwaters put suppliers out of action.

The strong yen, which hit multiple historic highs against the dollar this year, has only compounded the pain. With jitters about Europe and U.S. economies, global investors have turned to the yen as a relative safe haven.

For exporters like Toyota, a strong yen reduces the value of overseas profits when repatriated and makes Japanese products less competitive on prices in markets outside Japan.

Toyota's new forecasts incorporate a 120 billion yen hit on operating profit from the Thai floods and another 190 billion yen from the negative impact of foreign exchange rates.

It lowered its foreign exchange assumptions to account for the yen's appreciation over the last several months. It now expects the yen to average 78 to the dollar this year, from 80 yen to the dollar in its previous estimate. It assumes 109 yen against the euro, down from 116 yen to the euro.